Consumers Pile on Credit Card Debt While Savings Slip
The numbers could mean that retail, which had been recovering, is about to see a slide of consumer spending. Retail has been in recovery since the pandemic crash. But now some data suggests that the industry may be facing increasing headwinds, which ultimately could be bad news for retail and the associated CRE property sector.
One is a resurgence of credit card debt. Banks have seen a huge uptick of credit card use, according to Federal Reserve data. Annualized percentage of change, seasonally adjusted, of credit card and other revolving credit plan use through banks was up 17.3% in February, the most recent comparative data available.
When pulling together all types of organizations providing revolving credit, the total topped $1.103 trillion in April, an all-time high since at least 1968, as Fed data from the Federal Reserve Bank of St. Louis shows.
According to the Fed’s report, “Economic Well-Being of U.S. Households in 2021,” credit cards are almost ubiquitous, with 84% of adults having at least one last year. There are two general uses of them: convenience of payment with users clearing balances every month and those who carried a balance between months at least once last year. The split is about 50-50 between the two groups.
Another sign of potential problems is the consumer savings rate. According to data from the Bureau of Economic Advisors, personal savings, which was at 6% of income in January, fell to 5.9%
